Tuesday, April 23, 2024 - Week 17: The European Central Bank's steadfast approach to combating inflation, the Bank of England's cautious stance amid persistent price pressures, and the Bank of Japan's policy normalisation efforts are expected to shape the trajectories of the euro, British pound, and Japanese yen, respectively. Geopolitical tensions in the Middle East and the upcoming European Parliament elections add an element of uncertainty to the market outlook.
Notable events in the coming days include the release of the US GDP growth rate (April 25) and the US Core PCE Price Index MoM (April 26), both of which could impact the strength of the US dollar. Traders should also keep an eye on the UK's Nationwide Housing Prices YoY data (May 2) for potential short-term influences on the British pound.
EURUSD: Wait, Prepare to Sell on Rallies
The euro is expected to experience a steady decline against the US dollar over the next five weeks, with the EUR/USD projected to trade at 1.07 by the end of Q2 2024 and 1.03 in 12 months. The European Central Bank's commitment to maintaining record-high interest rates to combat persistent inflation may limit the euro's appreciation potential, while the robust US economy and the Federal Reserve's cautious approach to monetary policy continue to support the US dollar. Forex traders should look for selling opportunities in the EUR/USD pair during rallies, in line with the expected long-term downtrend. Geopolitical tensions in the Middle East and the upcoming European Parliament elections could add volatility to the pair's performance.
GBPUSD: Wait for Selling Opportunities
The British pound is projected to experience a gradual fall against the US dollar over the next five weeks, with the GBP/USD expected to trade at 1.25 by the end of Q2 2024 and 1.21 in 12 months. The Bank of England's cautious approach to monetary policy, driven by persistent inflationary pressures and mixed economic performance, contributes to the pound's weakening bias. Forex traders should seek selling opportunities in the GBP/USD pair, aligning with the anticipated long-term downward trend. The upcoming UK local elections (May 2024) and key economic data releases could further influence the pair's short-term performance.
USDJPY: Awaiting Buying Opportunities Amid Short-Term Volatility
The USD/JPY currency pair is expected to experience an overall climb over the next five weeks, with the pair projected to trade at 153.53 by the end of Q2 2024 and rise to 160.16 in 12 months. The Bank of Japan's recent policy shift towards interest rate hikes and the termination of its yield curve control could lead to increased volatility in the short term. However, the effectiveness of the BoJ's policy normalisation efforts and the timing of future rate hikes remain uncertain, which may limit the yen's potential appreciation. Forex traders should look for buying opportunities in the USD/JPY pair, especially during dips, in line with the anticipated long-term upward trend. US economic data releases and Federal Reserve monetary policy decisions could impact the pair's short-term direction.
Gavin Pearson
Retail trader since 2008
Specialises in forex
Funded account from the 5ers.com
Member of the eToro Popular Investors Program
Regular contributor to FXStreet.com analysis and education pages
Returned 27% in 2022 and -2.7% in 2023
Exclusively forex focused
Copy Trading available at eToro
Disclaimer
Past performance is not indicative of future results
Trading involves risk, and you could lose money
-end-